Starbucks and others v BSkyB – Trade mark ‘distinctiveness’ and establishing a reputation in the UK

Friday 23 November 2012

Earlier this year, BSkyB announced its plans to launch a new internet television service, “NOW TV”. Starbucks, a broadcasting and telecommunications company (no relation to the well-known coffee company!) commenced proceedings against BSkyB, alleging trade mark infringement and passing off. Starbucks had registered a Community Trade Mark comprising the words “now” with six lines emanating from the letter “o”. The mark was used for a number of services, including its internet television service broadcast in Hong Kong.

On 2 November 2012, the High Court held that BSkyB’s use of the name “NOW TV” did not amount to trade mark infringement, nor did it amount to passing off.

Trade Mark Infringement

Registered trade marks may be challenged on a number of grounds, including on the basis that the mark is devoid of distinctive character or where it describes a characteristic of the goods/services it represents.

The Court held that the word “now” amounted to a description of the services provided, namely the instant, immediate nature of the service, and therefore insufficiently distinctive to qualify as a registrable mark. This finding was made despite the fact that Starbucks’ “now” mark contained a figurative element (the six lines emanating from it). As a result, Starbucks’ trade mark was invalid.

The Court warned trade mark registries to be astute to attempts by applicants to register descriptive words alongside “figurative figleafs of distinctiveness”.

Often, when registering marks containing words that may be descriptive in nature, a combination of the word together with some figurative element (such as a logo) will satisfy the Intellectual Property Office (“IPO”) that the mark is sufficiently distinctive to meet registration requirements. In light of the Court’s comments, care should be taken to ensure that a mark containing descriptive words is genuinely distinctive when applying for its registration.

Passing Off

In order to establish a claim in passing off, it must be shown (amongst other things) that there is goodwill associated with the mark in theUK.

The Court had to consider whether Starbucks, a non-UK business, had protectable goodwill in theUKas a result of a reputation generated by its web presence. Starbucks’ service was available via its website, various airline carriers and (most widely) via YouTube.

The Court held that mere web presence was not enough to establish a reputation giving rise to protectable goodwill in the UK. Otherwise, companies all around the world could establish protectable goodwill in the UK thanks to YouTube. It would have to be shown that Starbucks actually had “customers” in theUK.

The fact that the “now” internet television service was free did not affect the question of whether viewers were “customers” or not. “Free-to-air” internet television services such as ITV Player and BBCiPlayer had a protectable goodwill in theUK, despite the fact that they were free. The Court looked carefully at who Starbucks intended to target by making its service available online. It found that the primary purpose was to promote its business in Hong Kong and increase its customer base in Hong Kong. As a result, it had customers – and therefore goodwill – in Hong Kong but not the UK.

The Court also held that goodwill could be established in a product or service that was still at the promotion/marketing stage but had not yet been released to the public. However, whilst Starbucks had planned on future expansion in the UK, the mere fact that its service was available in the UK did not amount to a sufficiently targeted campaign aimed at generating UK customers.

Interestingly, the Court did note that reputation could be established amongst a relatively small section of society, for example the Chinese-speaking community in theUK.

It seems, therefore, that the Court will take a commercial view when assessing whether a non-UK business has established a reputation in the UK through web presence alone. Unless the primary purpose behind making services available online is to target UK customers, it is unlikely that non-UK businesses will have established a reputation in the UK in the context of a passing off claim.

Non-UK businesses should, therefore, consider registering their brand or mark in the UK as a registered trade mark, particularly where such businesses plan to expand to the UK market but have not yet taken any significant steps in doing so.